What is franchise taxes?

In essence, a franchise tax is a government

tax charged by individual U.S. states to corporations, limited

liability companies and partnerships that have nexus in the state.

Franchise fees are based on the net worth or capital held by the

entity. Basically, the franchise tax charges corporations for the

privilege of doing business in that state.

Franchise tax, very much like federal taxes,

are imposed annually. And, those companies that avoid franchise

taxes can actually be disqualified from doing business in that

state. However, it is important to note that a franchise tax is not

a tax on the franchise. It is just a form to call taxes on business

income.